The Leaflet – The Fracking Debate

Published June 14, 2012

Today, North Carolina is expected to vote to allow the process of hydraulic fracturing, or “fracking,” for natural gas. This comes just a month after Vermont became the first state to completely ban the process, even though the state has no known resources that actually could be tapped this way. Many environmental activists proclaimed Vermont’s ban a victory and hoped the idea would spread to states that actually had resources to frack.

Fortunately, shale-rich states such as North Dakota, Ohio, Pennsylvania, and Texas have seen such an economic boom from the industry that other states with similar resources are not likely to follow Vermont’s lead.

In Pennsylvania alone, shale gas production in 2009 generated 48,000 jobs and $400 million in tax revenues, according to a study conducted by Pennsylvania State University. In Ohio, an independent study found the industry could directly create more than 200,000 jobs by 2015, increasing Ohio’s economic output by $22 billion.

According to the National Conference of State Legislatures, 130 bills dealing with the fracking issue were proposed this session in at least 24 states. Many states have moved forward on regulating fracking in the way that best fits their resources and communities’ concerns.

Still, many environmental groups are pressing the federal government to assert more regulatory control over the industry. According to the American Enterprise Institute, President Barack Obama’s “administration has already launched 10 different initiatives to study or establish new regulations on hydraulic fracturing.”

What is not needed is for the federal government to once again come in and demand duplicative oversight and other overly burdensome regulations that will cost states jobs and economic growth.

This week’s edition of The Leaflet features research and commentary addressing fracking bans, public broadcasting, Wisconsin medicaid reforms, enterprise value tax, Pennsylvania liquor privatization, and Arne Duncan.


John Nothdurft
Director – Government Relations
The Heartland Institute


Lead Story

Research & Commentary: Hydraulic Fracturing Bans

Despite there being no known natural gas resources in Vermont, Gov. Peter Shumlin recently signed into law the nation’s first state ban on hydraulic fracturing (fracking). Vermont’s ban is little more than symbolic, but Shumlin publicly encouraged other states to impose bans, saying the increased natural gas production is not worth the risk of contaminating drinking supplies.

Supporters of the ban claim fracking sites have contaminated nearby drinking water with high methane levels on several occasions. Last year, however, a peer-reviewed Duke University study found no evidence to support claims of methane contamination unique to fracking. It instead pointed to poorly constructed drill casings. Instances of faulty casings do occur, but they happen rarely and are not unique to fracking.

Claims of contamination risks likely will continue as fracking operations move into the more densely populated East Coast states due to the discovery of the Marcellus Shale. Recent economic evidence from Pennsylvania reveals the discovery and extraction of an abundant, clean energy source such as natural gas should be viewed as a positive by residents and policymakers.

In 2009, Pennsylvania was able to add 48,000 jobs, $40 million in tax revenues, and $3.8 billion in economic output, according to a Pennsylvania State University study, with higher economic activity concentrated near Marcellus wells. In March 2012, the U.S. EPA tested water supplies from 11 homes in Dimock Township, Pennsylvania, an area with a large number of wells, and found no health concerns.

Ultimately, a statewide ban on fracking would impose an unnecessary burden on the economy while producing little to no additional protection of drinking water supplies. States considering tighter regulation of hydraulic fracturing should consider the following:

* Regulation should be based on the best available science, never on unfounded claims driven by fear and misinformation.

* Regulation should be inclusive and take account of voluntary initiatives already undertaken by the drilling companies.

* Proposed regulations should be decided on as quickly as possible to prevent unnecessary loss of investment as businesses pull out because of regulatory uncertainty.

What We’re Working On

Public Broadcasting in Budget Crosshairs

In this article from InfoTech & Telecom News, Bruce Edward Walker discusses how Federal taxpayer funding for public broadcasting once again is under scrutiny as Congressional leaders seek to stem the growth of the ballooning national deficit. Walker speaks with several experts about whether public broadcasting can survive without this funding.

Obama Administration Approves Wisconsin Medicaid Reforms
Health Care 

In accordance with standards set by the Patient Protection and Affordable Care Act (PPACA), the federal government has approved changes to Wisconsin’s state Medicaid program, BadgerCare.
The federal government asked Republican Gov. Scott Walker’s administration to scale back its originally proposed changes, which would have caused an anticipated 60,000 participants to become ineligible. The newly approved changes reduce to 17,000 the number of adults losing taxpayer-funded coverage.

Research & Commentary: Enterprise Value Tax
Finance and Insurance

A proposal from the Obama administration that has generated significant opposition from the financial sector is the enterprise value tax. This is because high taxes on investment income can be a hindrance to investment by reducing incentives for investors and financial managers to engage in certain financial activities or higher-risk investments. Senior Policy Analyst Matthew Glans examines the enterprise value tax proposal and its possible effects on financial markets and the economy.

Research & Commentary: Pennsylvania Liquor Privatization
Budget & Tax

The Pennsylvania House is considering a bill that would privatize the state’s liquor sales. Currently all liquor sales in Pennsylvania are done in state-run stores. Other than Pennsylvania, only Utah retains total government control over both wholesale and retail liquor sales within its borders. Senior Policy Analyst Matthew Glans examines the proposal to privatize Pennsylvania’s liquor sales and its possible effects on consumers and the economy.

Duncan Poised to Intrude into Local Schools

U.S. Education Secretary Arne Duncan has paid much lip service toward giving state and local educators more flexibility in deciding how best to meet the individual needs of students, while at the same time committing the deepest big-government incursion into education ever. Through Obama’s Race to the Top Initiative, the Department of Education is requiring states to make favored policy changes to get a portion of the program’s $4.35 billion. Now many states are spending thousands of man-hours crafting their applications, with no guarantee they’ll win; those that do win will be required to have federal oversight to make sure they follow through with their plans.

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Upcoming Events 

Heartland’s Emerging Issues Call

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Thursday, August 9, 2012
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Policy Newspaper 


The June issue of FIRE Policy News reports on the Federal Reserve’s apparent commitment to more years of historically low interest rates, despite indications of an improving economy and rising price inflation.

Quick Hits 

Institute for Truth in Accounting Report Says States Have $900 Billion Off-Balance Sheet Debt

Video: Economic Freedom in 60 Seconds

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